BASE RATE

Base rate in banking:

With the passing time we Indians always try to misuse the freedom given to us, same happened in the banking sector. RBI asked the commercial banks to fix Benchmark Prime Landing Rate(BPLR) but at present it do not have an significance in real sense. RBI was thinking to have some alternate for replacing it and after a long time they made up their mind to introduce base rate in banking sector to keep some control on landing rates. So the concept of Base Rate came in this sector but it still need to execute. In my opinion it will also not work in our economy because RBI is giving a lot of freedom in calculating their base rate, but besides it there should be some control of RBI in calculating the base rate. What the RBI's committee did was that they only gave a formula for base rate and rest of the work is left on the banks